Banks and investment managers must allay public fears over Y2K to avoid a run by customers to empty accounts and cash in stocks, an expert has warned.

And one survey found up to 30 percent of consumers planned to raid their accounts before 2000, the International Bar Association's Globalisation of Mutual Funds conference at the Southampton Princess was told yesterday.

But Bermuda's banks insist they are on track to tackle the public education campaign vital to complement their technical Y2K strategies smoothly.

Donald Boteler, the vice president of Washington-based industry group Investment Company Institute, issued the warning on Y2K's "wildcard factor'' -- how investors and consumers would react in the countdown to 2000.

Unlike technical issues which to some extent could be measured, controlled and attacked systematically, the public reaction was "largely unknown''.

He called on businesses, banks and investment houses to draw up strategies to convince the public not to panic -- to complement technical efforts.

A flood of ill-informed customers trying to remove all their money from bank accounts at the last minute could trigger disaster for banks even if they were fully Y2K compliant, and technically 100 percent bug-free.

And he said those companies whose CEOs viewed the Y2K issue as solely a "technical problem'' would most likely fail in attempts to overcome it.

"What every business and institution needs is a combined technical, business and communication effort,'' he said.

"Obviously it is very important we get our story out there, to consumers and investors.'' Securities and Exchange Commission assistant director Sheila Slevin told the conference that often no matter how positive Y2K news was, many in the public interpreted it as bad news.

"Being ready will do us no good if our investors don't believe we're ready.

"The greatest danger we face is not an operational failure but a failure of confidence.'' Bank of Butterfield CEO and president Calum Johnston said the bank's plan was to incorporate their technical compliance strategy with an extensive public awareness campaign.

He said on the technical side the bank would have "double compliance''.

All Bank of Butterfield computer systems were already endorsed as Y2K compliant by suppliers.

But an in-house team was also working full-time on guaranteeing compliance, which was also to be monitored by IBM Canada.

Banks receive Y2K warning "I'm quite sure people are going to have a few cans of beans stashed at home when the year changes over to 2000 and some alternative way to cook, and probably money for a couple of weeks,'' he said.

Plans have already been made with the Bermuda Monetary Authority to have more hard cash than usual available to the banks for to accommodate but he said it was vital people did not go "overboard''.

"We are certainly aware of this issue and plan later in the year to fully advise the public if they take all their money out of the bank and hide it at home it is at much greater risk than if left safely in their account.

"We will certainly be ready to transact on the first business day of 2000 and we have an ongoing strategy to inform and reassure the public of the extensive work we have done to achieve that so they do not have to worry.'' Bank of Bermuda senior vice president Barry Shailer agreed that letting clients know of technical compliance plans was vital.

"Since July 1997 we have issued regular client briefings on our status. We update our shareholders on our Year 2000 project on an ongoing basis,'' he said.

And at the end of May the Bank will send a flyer to all retail clients.

Prepared: Bank of Butterfield president Calum Johnston, who is planning a public awareness campaign on Y2K.